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US Senate leaders near deal on fiscal crisis

© AFP

Text by FRANCE 24

Latest update : 2014-11-05

US Senate leaders were upbeat on Monday as they neared a deal to raise the debt ceiling and end the government shutdown, just days before a deadline to avoid a possible default.

US Senate leaders inched closer to a deal on raising the debt ceiling and ending the government shutdown on Monday just days before a Treasury Department deadline on borrowing.

Senate Majority Leader Harry Reid, a Democrat, and his Republican counterpart, Mitch McConnell, ended a day of marathon talks with optimistic proclamations, as details of their agreement began to emerge.

“We’ve made tremendous progress,” Reid said, underscoring the urgency of settling the fiscal crisis before October 17, when the Treasury Department estimates it will reach a $16.7 trillion borrowing limit.

“We hope that with good fortune ... that perhaps tomorrow will be a bright day,” Reid said, hinting at the possibility that a bipartisan Senate deal may be announced on Tuesday.

McConnell, a fierce critic of Reid’s, smiled as he said, “We’ve had a good day; had a good day yesterday”.

The deal would bring an end to the nearly three-week-long government shutdown, as well as raise the debt ceiling by enough to cover the nation’s borrowing needs at least through mid-February 2014, according to a source familiar with the negotiations.

Government operations would be funded through the middle of January, keeping in place the across-the-board “sequester” spending cuts that took effect in March, though government agencies would have more latitude to ease their impact. It would also set up a new round of budget talks to reach an agreement by year’s end.

As talks between Reid and McConnell continue, however, these details are subject to change, according to Senate aides.

Democrats appear to have fended off any major changes to President Barack Obama’s signature health law, also known as “Obamacare”, which conservative Republicans in the House of Representatives have sought to delay as a condition of continued government funding.

House Majority Leader Eric Cantor told reporters that Republican lawmakers will hold a closed-door meeting on Tuesday “to discuss a way forward, so stayed tuned.”

House Speaker John Boehner could face an insurrection that could threaten his position as Washington’s senior Republican if he tries to advance a bill over the objections of rank-and-file conservatives in that chamber.

Boehner has not publicly commented on the Senate negotiations. A spokesman said the House would review whatever the Senate passes.

Mixed reaction

In an early sign of Republican opposition, Representative Joe Barton of Texas told reporters: “No deal is better than a bad deal,” as he downplayed the impact of a possible US default if the debt ceiling is not raised in time.

But Republican Representative Peter King of New York said it would be hard for the House not to put it to a vote if it gets strong support from Senate Republicans.

“For the (Senator) Cruz wing of the party who say we should get a better deal, I say we would have gotten a better deal if we had not shut the government down and gotten right to debt negotiations,” said King, a moderate who has criticised the tactics of the conservative Tea Party faction.

Republicans have taken a hit in opinion polls since the standoff began and some in the party worry it could hurt their chances to win control of the Senate in next year’s midterm elections.

A Washington Post/ABC News poll released on Monday found that 74 percent of Americans disapprove of the way congressional Republicans have handled the standoff, compared with a 53 percent disapproval rating for Obama.

Deadline looms

Even if a deal is reached on Tuesday, it was unclear whether Congress can pass legislation to avert the October 17 default deadline. Hard-liners such as Texas Republican Senator Ted Cruz might be able to exploit Senate rules to delay a vote for several days.

Confronted by a throng of reporters on Monday, Cruz responded to repeated questions about his intentions by only saying, “We’ll have to wait to see what the details are” of any deal.

Because of the uncertainty over the US economy, banks and money market funds are already shunning some government securities that are often used as collateral for short-term loans and to facilitate many other transactions.

Some Republicans have argued that the government could avoid serious consequences by prioritising interest payments over other types of spending, but their position is not shared by the general public.

A Reuters/IPSOS poll released on Tuesday found that only 25 percent believe the debt ceiling issue is “overblown.”

US stocks were buoyed by prospects of a deal. The S&P 500 Index closed on Monday up 0.41 percent while the Nasdaq Composite Index ended 0.62 percent higher.

Regardless, the government shutdown is beginning to weigh on the economy. Hundreds of thousands of federal employees have been furloughed, or sent home without pay, due to the shutdown. While many are likely to be remunerated once the government reopens, they have been forced in the meantime to tighten their own budgets.

(FRANCE 24 with wires)

Date created : 2013-10-15

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